Housing Projects – Israeli Style

Housing Projects – Israeli Style

By: Dafna Shemer

One of the repercussions of the 2011 housing protests was that recent Israeli governments, and the current minister of finance in particular, have taken measures to lower the housing costs. Are the housing initiatives successful? What are the future implications for housing projects?

One of the repercussions of the 2011 housing protests was that recent Israeli governments, and the current minister of finance in particular, have taken measures to lower the housing costs. For now it seems we’re still in trouble, though, given that the total number of monthly salary installments required to purchase an apartment in Israel (according to Ministry of Construction and Housing data for the first half of 2015) amounts to 146, whereas in 2009 the total was 116.

The project Mechir Lamishtaken (“Buyer’s Price”) was launched in an effort to address the growing housing crisis in Israel. Through this project developers compete for discounted land to construct affordable housing for first-time homebuyers who meet certain qualifications, and the apartments are then offered for sale by lottery. As of 2016, a total of 7,600 apartments were offered in tenders. In Jerusalem the total was 501, and tenders will soon be announced for 407 apartments. The (501) apartments offered so far amount to 18% of the annual average for construction starts in Jerusalem over the past five years. The apartments offered so far in the context of Mechir Lamishtaken were mainly in the neighborhood of Ramat Shlomo (86%), and the remainder in Pisgat Ze’ev. The average apartment size is 116 square meters (Sq m.), which exceeds the 2016 average for Jerusalem, at 81 Sq m.

The media has pointed out that apartments in the Mechir Lamishtaken program are generally larger than typical, and so too in Jerusalem: 40% of the apartments offered through the program have 5 rooms, and 35% have 4-4.5 rooms. According to data on construction starts in Jerusalem published by the Central Bureau of Statistics, only 20% of apartments under construction in Jerusalem in 2016 had 5 rooms.

The prices of apartments that have been won by lottery are published on the website of the Ministry of Housing and Construction, and as promised, their prices are lower than average for the relevant neighborhoods. An apartment in this project in Ramat Shlomo costs NIS 12,900 per Sq m. whereas the typical cost, according to the Madlan website, is NIS 19,700 per Sq m. – a difference of 54% per square meter.

In Pisgat Ze’ev the cost for apartments in this project is NIS 9,500 per Sq m., compared with the average cost of NIS 16,200 per Sq m. – a difference of 69% per square meter.

Mechir Lamishtaken reserves a number of places for “locals”: 38% of the lottery winners in Jerusalem are Jerusalem residents, 22% are from the Tel Aviv District, and another 20% are from the Central District. A relatively small proportion of winners are from the environs of Jerusalem: 4% from the Jerusalem District (excluding the city) and 8% from the Judea and Samaria District.

The next tenders are expected to be announced in Gilo and Malha, thus maintaining the trend of using available peripheral lands in implementation of the project. The attractive price and “brand newness” of the apartments are plusses, but the locations are less attractive in terms of public transportation and, as a result, access to places of employment.